Guide to TUPE consultation compliance

Outgoing employer must inform and consult with staff

Employers involved in a business transfer must inform and consult with appropriate representatives of the affected employees about the transfer and any measures proposed. Certain specified information must be provided to the representatives long enough before the transfer to enable the outgoing employer to consult with them about it.

If there are any changes or proposals for changes following the transfer, these measures will have to be discussed with the representatives of the affected employees. The new employer is required to provide the old employer with information on proposed measures to allow the old employer to comply with their duty to inform and consult. There is no set timetable for consultation, but the larger the transaction and the more staff affected, the longer the timetable will need to be.

If there is a failure to inform and consult, a complaint can be made to the Employment Tribunal. If successful, the Tribunal can award whatever compensation it considers just and equitable having regard to the seriousness of the employers failure up to a maximum of 13 weeks pay per affected employee. Information and consultation failures can now result in joint and several liability between the outgoing and incoming employers, unless the contract governing the transfer clearly caters for apportionment of liability here.

Old employer must provide employee liability information to new employer

Since April 2006, the old employer has had a duty to provide the new employer with written details of the transferring employees (including identity, age, particulars of employment, disciplinary and grievance records, employee claims and collective agreements) together with all associated rights and liabilities that will transfer. This information must be passed not less than 14 days before the transfer, although in practice the new employer will aim to attain this information much earlier.

If there is a failure to comply with this duty by the old employer, the new employer can apply to the Tribunal for compensation which will be assessed with regard to the losses suffered. The maximum amount of compensation which can be awarded for a failure to inform or consult over a TUPE transfer is 13 weeks' gross pay (regulation 16(3), TUPE 2006). There is no minimum award.

A failure to comply with TUPE could therefore expose employers to claims large enough to undermine the entire transaction.

What other practical steps can we take to protect ourselves from the effects of TUPE?

Although there is nothing anyone can do to prevent TUPE applying (it is not possible to contract out of TUPE), there are steps which both the outgoing and incoming employers can take to divide up TUPE liabilities contractually between them. Whilst under TUPE employment liabilities connected to the transferring employees will always transfer to the new employer (so employee claims should always be made against the new employer), the parties can still agree contractually to divide up the liabilities between them in a different way. This ought to be done by means of contractual indemnities.